- 2020 revenue of $526 million and
fourth quarter 2020 revenue of $135
million
- 2020 net loss of $75 million and
fourth quarter net income of $2.4
million
- 2020 Adjusted EBITDA1 of $233
million and fourth quarter 2020 Adjusted EBITDA1
of $51 million
- Generated cash flow from operations of $166 million in 2020 and concluded the year with
a cash and cash equivalents balance of $160
million
LONDON, March 17, 2021 /CNW/ - ADVANZ PHARMA Corp.
Limited ("ADVANZ PHARMA" or "the Company") (TSX: ADVZ), a global
pharmaceutical company with a strategic focus on complex medicines
in Europe, today announced its
financial and operational results for the three and twelve months
ended December 31, 2020. All
financial references are in U.S. dollars ("USD") unless otherwise
noted.
"The Company reported more than half-a-billion dollars of
revenue for the second straight year, and consistent Adjusted
EBITDA on a year-over-year basis," said Graeme Duncan, Chief Executive Officer of ADVANZ
PHARMA. "We also had a strong year for M&A in 2020, resulting
in greater market diversity and penetration, and a growing
portfolio of complex medicines that help improve the lives of the
patients who we serve."
Consolidated Fourth Quarter and 2020 Financial and
Operational Results
- Reported fourth quarter 2020 revenue of $135.0 million, compared to $122.0 million for the fourth quarter of 2019,
and $128.7 million for the third
quarter of 2020.
- Reported net income for the fourth quarter of 2020 of
$2.4 million.
- Reported fourth quarter Adjusted EBITDA1 of
$50.5 million, compared to
$52.8 million for the fourth quarter
of 2019, and $53.5 million for the
third quarter of 2020.
- Generated cash flows from operating activities of $166.2 million in 2020, compared to $188.2 million in 2019.
- As of December 31, 2020, the
Company had a cash and cash equivalents balance of $160.2 million compared to $261.1 million as at December 31, 2019.
Fourth Quarter 2020 Segment Results
International Segment
ADVANZ PHARMA International segment revenue of $405.4 million for the year ended December 31, 2020, increased by $26.6 million or 7%, compared to 2019. A
$24.5 million increase in revenue was
further compounded with a $2.1
million increase in revenue as a result of the GBP
strengthening against the USD, when compared to 2019.
The increase in revenue is primarily due to $20.4 million of revenue from the recently
acquired portfolio of Alprostadil products sold within the ADVANZ
PHARMA International segment, and $18.5
million of revenue from the Correvio acquisition, which were
not included in the comparative period.
The remaining net decrease in revenue attributable to key
products for 2020, excluding the impact of foreign currency
translation, consisted of a $8.2
million decrease from Fusidic Acid; a $4.1 decrease from Thiamine; a $2.0 decrease from Carbimazole; and a
$2.0 million decrease from
Prochlorperazine Mesilate.
These lower product volumes and revenues are primarily due to
ongoing competitive market pressures resulting in market share
erosion in the U.K., combined with loss of tenders and phasing of
shipments.
These declines to revenue were partially offset by a
$4.7 million increase from
Cyanocobalamin due to a release of certain provisions; a
$2.9 million increase from Codeine
Phosphate + Paracetamol; and a $2.7
million increase from Salagen®.
North America Segment
ADVANZ PHARMA North America segment revenue of $120.2 million for the year ended December 31, 2020, decreased by $9.3 million, or 7%, compared to 2019.
The decrease was primarily due to a $11.1
million decrease from Dyrenium® primarily as a result of
generic competition that arose during the latter half of 2019; a
$5.6 million decrease from Photofrin
as a result of COVID-19; and a $3.8
million decrease from Donnatal® due to continued competitive
pressures impacting market share.
These declines in revenue were partially offset by $3.9 million of revenue from the recently
acquired portfolio of Alprostadil products sold within the ADVANZ
PHARMA North America Segment, which was not included in the
comparative period; a $3.2 million
increase from Plaquenil® driven by higher customer demand due to
COVID-19; a $3.2 million increase
from Salagen® due to the timing of the acquisition in 2019 and
phasing of shipments; and a $1.2
million increase from Dibenzyline® primarily due to lower
returns during 2020. The remaining decrease was primarily due to
general competitive market pressures across the segment's product
portfolio.
Pipeline Update
The Company continued to make progress with respect to the
evaluation and advancement of its pipeline of medicines.
In the fourth quarter of 2020, ADVANZ PHARMA submitted seven for
approval and received approval for two medicines.
Going forward, the Company intends to expand its product
portfolio in order to deliver mid-term value and long-term growth,
through pipeline filling, optimization, licencing and development
partnerships. These initiatives will be focussed on niche and
differentiated generics, complex specialty and value-added
medicines.
Updated Investor Presentation
To support the investment community's understanding of the
Company's business, ADVANZ PHARMA will upload its latest
investor presentation, and certain additional information about the
Company and its business, on the Downloads section of the Investor
Relations section of its website, available here:
https://www.advanzpharma.com/investors/downloads
Consolidated Financial Results
|
Twelve months
ended
|
(in $000's, except
per share data)
|
Dec 31,
2020
|
Dec 31,
2019
|
Revenue
|
525,584
|
|
508,321
|
|
Gross
profit
|
333,249
|
|
336,812
|
|
Gross profit
%
|
63
|
%
|
66
|
%
|
Adjusted gross
profit (1)
|
337,178
|
|
336,812
|
|
Adjusted gross
profit % (1)
|
64
|
%
|
66
|
%
|
Total operating
expenses
|
338,558
|
|
476,846
|
|
Operating loss for
the year
|
(5,309)
|
|
(140,034)
|
|
|
|
|
Income tax
recovery
|
(48,907)
|
|
(22,007)
|
|
Net loss for the
year
|
(74,858)
|
|
(196,018)
|
|
|
|
|
Loss per
share
|
|
|
Basic
|
(1.53)
|
|
(4.01)
|
|
Diluted
|
(1.53)
|
|
(4.01)
|
|
|
|
|
EBITDA
(1)
|
162,433
|
|
92,013
|
|
Adjusted EBITDA
(1)
|
232,555
|
|
233,581
|
|
Notes:
|
(1)
|
Represents a non-IFRS
measure. For the relevant definitions and reconciliation to
reported results, see "Non-IFRS Financial Measures" section
of this press release. Management believes non-IFRS measures,
including Adjusted EBITDA, provide supplementary information to
IFRS measures used in assessing the performance of the
business.
|
Revenue
Revenue for the fourth quarter of 2020 increased by $13.0 million or 11% compared to the
corresponding period in 2019, primarily due to higher sales from
the ADVANZ PHARMA International segment combined with higher
foreign exchange rates impacting translated revenues from this
segment. This increase is further combined with higher sales from
the ADVANZ PHARMA North America segment.
Revenue for the year ended December 31,
2020, increased by $17.3
million, or 3%, compared to 2019, primarily due to higher
sales from the ADVANZ PHARMA International segment combined with
higher foreign exchange rates impacting translated revenues from
this segment, partially offset by lower sales from the ADVANZ
PHARMA North America segment.
Gross profit for the fourth quarter and year ended December 31, 2020 increased by $0.8 million, or 1%, and decreased by
$3.6 million, or 1%, respectively,
compared to the corresponding periods in 2019, primarily due to
changes in the product mix.
Operating expenses for the fourth quarter and year ended
December 31, 2020 decreased by
$18.7 million, or 18%, and
$138.3 million, or 29%, respectively,
compared to the corresponding periods in 2019.
The decrease in operating expenses for the year is primarily due
to $124.2 million lower impairment
charges, and $12.2 million lower
amortization charges on intangible assets primarily due to prior
year impairments, partially offset by additional amortization on
recently acquired intellectual properties related to Correvio and
portfolio of Alprostadil products.
General and administrative expenses reflect costs related to
salaries and benefits, professional and consulting fees, public
company costs, travel and other administrative expenditures.
General and administrative expenses for the fourth quarter and year
ended December 31, 2020 decreased by
$0.8 million, or 7%, and $4.1 million, or 10%, compared to the
corresponding periods in 2019.
The annual decrease is primarily attributable to lower employee
costs and costs related to infrastructure within ADVANZ PHARMA
North America primarily as a result of closure of the Barbados operations in the third quarter of
2019, partially offset by an increase attributable to the Correvio
Acquisition, combined with foreign exchange rate movements
negatively impacting translation of general and administrative
costs from ADVANZ PHARMA International.
Selling and marketing expenses reflect costs incurred by the
Company for the marketing, promotion and sale of its portfolio of
products across its segments. Selling and marketing expenses for
the fourth quarter and year ended December
31, 2020 increased by $2.3
million, or 27%, and $1.5
million, or 4%, respectively, compared to the corresponding
periods in 2019.
The annual increases in selling and marketing expenses are
primarily attributable to an increase within ADVANZ PHARMA
International largely due to costs associated with sales promotion
and advertising activities of the Correvio Acquisition, which was
not included in the comparative period of 2019.
Research and development expenses reflect costs for clinical
trial activities, product development, professional and consulting
fees and services associated with the activities of the medical,
clinical and scientific affairs, quality assurance costs,
regulatory compliance and drug safety costs (Pharmacovigilance) of
the Company.
Research and development costs for the fourth quarter and year
ended December 31, 2020 increased
by $3.2 million, or 46%, and
$3.9 million, or 13%, respectively,
compared to the corresponding periods in 2019 primarily due to the
Correvio Acquisition, combined with foreign exchange rate movements
negatively impacting the translation of general and administrative
costs from ADVANZ PHARMA International. This is partially offset by
lower clinical trial spend, combined with lower costs associated
with validation and stability testing activities.
Adjusted EBITDA for the fourth quarter and year ended
December 31, 2020 decreased by
$2.3 million, or 4%, and $1.0 million, or 0%, respectively, compared to
the corresponding periods in 2019.
In addition, during the fourth quarter of 2020 and year ended
December 31, 2020, the Company
incurred $2.1 million and
$9.7 million, respectively, of
Corporate costs.
As of December 31, 2020, the
Company had cash and cash equivalents of $160.2 million and 48,913,490 limited
voting shares issued and outstanding.
About ADVANZ PHARMA
ADVANZ PHARMA is a global pharmaceutical company with a
strategic focus on complex medicines in Europe. With an agile and experienced team,
including direct sales, marketing and medical capability across
many of Europe's major markets,
the Company supplies, innovates and enhances the critical medicines
patients depend on, ensuring continued patient access and improving
health outcomes.
ADVANZ PHARMA has expertise in the anti-Infectives and
endocrinology therapy areas, along with strong relationships with
hospital decision makers, making it an attractive partner when
commercialising complex medicines in Europe.
ADVANZ PHARMA has an operational headquarters in London, an operations centre of excellence in
Mumbai, commercial affiliates in
North America, Europe, and Australia, and an established global network
of commercial partners throughout the rest of the world.
Non-IFRS Financial Measures
This press release makes reference to certain measures that are
not recognized measures under International Financial Reporting
Standards ("IFRS"). These non-IFRS measures are not
recognized measures under IFRS and do not have a standardized
meaning prescribed by IFRS, and are therefore unlikely to be
comparable to similar measures presented by other companies. When
used, these measures are defined in such terms to allow the
reconciliation to the closest IFRS measure. These measures are
provided as additional information to complement those IFRS
measures by providing further understanding of the Company's
results of operations from management's perspective. Accordingly,
they should not be considered in isolation nor as a substitute to
the Company's financial information reported under IFRS. Management
uses non-IFRS measures such as Adjusted Gross Profit, EBITDA,
Adjusted EBITDA and Working Capital, to provide investors with
supplemental information of the Company's operating performance and
thus highlight trends in the Company's core business that may not
otherwise be apparent when relying solely on IFRS financial
measures. Management believes that securities analysts, investors
and other interested parties frequently use non-IFRS measures in
the evaluation of issuers. Management also uses non-IFRS measures
in order to facilitate operating performance comparisons from
period to period, prepare annual operating budgets, to assess its
ability to meet future debt service requirements, in making capital
expenditures, and to consider the business's working capital
requirements. Readers are cautioned that the non-IFRS measures
contained herein may not be appropriate for any other purpose.
Adjusted Gross Profit
Adjusted Gross Profit is defined as gross profit adjusted for
non-cash fair value increases to the cost of acquired inventory
from a business combination. Under IFRS, acquired inventory is
required to be recognized at fair value at the date of acquisition.
As this inventory is sold, the fair value adjustment represents a
non-cash cost of sale amount that has been excluded in adjusted
gross profit in order to normalize gross profit for this non-cash
component.
|
Three months
ended
|
Twelve months
ended
|
(in
$000's)
|
Dec 31,
2020
|
Dec 31,
2019
|
Dec 31,
2020
|
Dec 31,
2019
|
Gross profit per
financial statements
|
80,026
|
|
79,243
|
|
333,249
|
|
336,812
|
|
Add back: Fair
value adjustment to acquired inventory
|
1,666
|
|
—
|
|
3,929
|
|
—
|
|
Adjusted Gross
Profit
|
81,692
|
|
79,243
|
|
337,178
|
|
336,812
|
|
EBITDA
EBITDA is defined as net income (loss) adjusted for interest and
accretion expense, interest income, income taxes, depreciation and
amortization of intangible assets. Management uses EBITDA to assess
the Company's operating performance.
Adjusted EBITDA
Adjusted EBITDA is defined as EBITDA adjusted for certain
charges including costs associated with acquisitions, restructuring
initiatives, and other costs (which includes onerous contract costs
and direct costs associated with contractual terminations),
management retention costs, non-operating gains / losses,
integration costs, legal settlements (net of insurance recoveries)
and related legal costs, non-cash items such as unrealized gains /
losses on derivative instruments, share based compensation expense
/ recovery, fair value changes including purchase consideration and
derivative financial instruments, asset impairments, fair value
increases to inventory arising from purchased inventory from a
business combination, gains / losses from the sale of assets and
unrealized gains / losses related to foreign exchange. Management
uses Adjusted EBITDA, among other Non-IFRS financial measures, as
the key metric in assessing business performance when comparing
actual results to budgets and forecasts. Management believes
Adjusted EBITDA is an important measure of operating performance
and cash flow and provides useful information to investors because
it highlights trends in the underlying business that may not
otherwise be apparent when relying solely on IFRS measures.
The table below sets forth the reconciliation of net income
(loss) to EBITDA and to Adjusted EBITDA for the three and twelve
month periods ended December 31,
2020, and December 31,
2019.
|
Three months
ended
|
Twelve months
ended
|
(in
$000's)
|
Dec 31,
2020
|
Dec 31,
2019
|
Dec 31,
2020
|
Dec 31,
2019
|
Net Income (loss) for
the period
|
2,448
|
|
(24,600)
|
|
(74,858)
|
|
(196,018)
|
|
|
|
|
|
|
Interest and
accretion expense
|
12,832
|
|
25,017
|
|
91,610
|
|
105,683
|
|
Interest
income
|
(86)
|
|
(562)
|
|
(958)
|
|
(2,195)
|
|
Income
taxes
|
(42,852)
|
|
(14,661)
|
|
(48,907)
|
|
(22,007)
|
|
Depreciation
|
1,220
|
|
72
|
|
3,362
|
|
2,201
|
|
Amortization of
intangible assets
|
44,834
|
|
46,116
|
|
192,184
|
|
204,349
|
|
EBITDA
|
18,396
|
|
31,382
|
|
162,433
|
|
92,013
|
|
Impairment
|
957
|
|
21,000
|
|
5,073
|
|
129,281
|
|
Fair value adjustment
to acquired inventory
|
1,666
|
|
—
|
|
3,929
|
|
—
|
|
Acquisition related,
restructuring and other
|
6,915
|
|
10,506
|
|
30,009
|
|
33,841
|
|
Share-based
compensation expense
|
1,111
|
|
741
|
|
3,307
|
|
3,943
|
|
Foreign exchange
gain
|
38
|
|
75
|
|
(5,194)
|
|
(820)
|
|
Unrealized foreign
exchange (gain) loss
|
21,461
|
|
(10,890)
|
|
32,998
|
|
(24,677)
|
|
Adjusted
EBITDA
|
50,544
|
|
52,814
|
|
232,555
|
|
233,581
|
|
Notice Regarding Trademarks
This press release includes trademarks that are protected under
applicable intellectual property laws and are the property of
ADVANZ PHARMA or its affiliates or its licensors. Solely for
convenience, the trademarks of ADVANZ PHARMA, its affiliates and/or
its licensors referred to in this press release may appear with or
without the ® or TM symbol, but such references or the absence
thereof are not intended to indicate, in any way, that the Company
or its affiliates or licensors will not assert, to the fullest
extent under applicable law, their respective rights to these
trademarks. Any other trademarks used in this press release are the
property of their respective owners.
Notice Regarding Forward-looking Statements and
Information:
This news release includes forward-looking statements and
forward-looking information within the meaning of Canadian
securities laws. Often, but not always, and forward-looking
information can be identified by the use of words such as "plans",
"is expected", "expects", "scheduled", "intends", "contemplates",
"anticipates", "believes", "proposes" or variations (including
negative and grammatical variations) of such words and phrases, or
state that certain actions, events or results "may", "could",
"would", "might" or "will" be taken, occur or be achieved. Such
statements and information are based on the current expectations of
ADVANZ PHARMA's management, and are based on assumptions and
subject to risks and uncertainties. Although ADVANZ PHARMA's
management believes that the assumptions underlying these
statements and information are reasonable, they may prove to be
incorrect. The forward–looking events and circumstances discussed
in this news release may not occur by certain dates or at all and
could differ materially as a result of known and unknown risk
factors and uncertainties affecting ADVANZ PHARMA, including risks
associated with ADVANZ PHARMA's securities, increased indebtedness
and leverage, ADVANZ PHARMA's growth, risks associated with the use
of ADVANZ PHARMA's products, the inability to generate cash flows,
revenues and/or stable margins, the inability to repay debt and/or
satisfy future obligations, risks associated with a delay in
releasing ADVANZ PHARMA's financial statements (which could result
in a default under ADVANZ PHARMA's debt agreements and a violation
of applicable laws), ADVANZ PHARMA's outstanding debt, risks
associated with the geographic markets in which ADVANZ PHARMA
operates and/or distributes its products, the pharmaceutical
industry and the regulation thereof, regulatory investigations and
proceedings, the failure to comply with applicable laws, risks
associated with distribution agreements, risks associated with
general economic factors and market conditions, risks associated
with growth and competition, the failure to obtain regulatory
approvals, the equity and debt markets generally, general economic
and stock market conditions, risks associated with fluctuations in
exchange rates (including, without limitation, fluctuations in
currencies), political risks (including changes to political
conditions), risks associated with the United Kingdom's exit from the European Union
(including, without limitation, risks associated with regulatory
changes in the pharmaceutical industry, changes in cross-border
tariff and cost structures and the loss of access to the European
Union global trade markets), risks related to patent infringement
actions, the loss of intellectual property rights, risks and
uncertainties detailed from time to time in ADVANZ PHARMA's filings
with the Canadian Securities Administrators, risks related to the
spread of COVID-19 (including, without limitation, risks associated
with reliance on third party manufacturers and suppliers,
uncertainties relating to its ultimate spread, severity and
duration, and related adverse effects on the economies and
financial markets of many countries), and many other factors beyond
the control of ADVANZ PHARMA. Although ADVANZ PHARMA has attempted
to identify important factors that could cause actual actions,
events or results to differ materially from those described in
forward-looking statements and information, there may be other
factors that cause actions, events or results to differ from those
anticipated, estimated or intended. No forward-looking statement or
information can be guaranteed. Except as required by applicable
securities laws, forward-looking statements and information speak
only as of the date on which they are made and ADVANZ PHARMA
undertakes no obligation to publicly update or revise any
forward-looking statement or information, whether as a result of
new information, future events, or otherwise.
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SOURCE ADVANZ PHARMA Corp.